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Sunland Company purchases sails and produces sailboats. It currently produces 1.290 sailboats per year operating at normal capacity, which is about 80% of full capacity.

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Sunland Company purchases sails and produces sailboats. It currently produces 1.290 sailboats per year operating at normal capacity, which is about 80% of full capacity. Sunland purchases sails at $260 each, but the company is considering using the excess capacity to manufacture the sails instead. The manufacturing cost per sail would be $96 for direct materials, $88 for direct labor, and $90 for overhead. The $90 overhead is based on $78,690 of annual fixed overhead that is allocated using normal capacity. The president of Sunland has come to you for advice. "It would cost me $274 to make the sails," she says, "but only $260 to buy them, Should I continue buying them, or have I missed something?" Prepare a per unit analysis of the differential costs. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg (451) Make Sails Net Income Increase (Decrease) Buy Sails Direct material $ S $ Direct labor Variable overhead Purchase price Total unit cost $ $ Should Sunland make or buy the sails? Sunland should the sails

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